Guest Blog: Managing complaints with empathy is key to customer retention and advocacy

Nikki Ceko, General Insurance Account Director at Huntswood, has blogged for the ABI on how managing complaints with empathy is key to customer retention and advocacy, and shares findings from Huntswood's Complaints Outlook 2021. 

As the General Insurance Account Director at Huntswood, Nikki is responsible for the strategic direction and stakeholder engagement in the General Insurance market. Nikki works closely with insurance firms to understand their position and goals, before combining her technical knowledge and problem-solving skills to provide tailored solutions which deliver tangible business benefits. 

 

With the Financial Conduct Authority’s forthcoming price controls set to flatten the insurance market on price differentiation, it will be customer experiences such as complaints that come to define brand loyalty.

In the 2019 edition of Huntswood’s Complaints Outlook, we identified significant commercial value in complaints. Our research revealed that there are clear links between excellent complaints management and increased customer retention and advocacy.

Complaints Outlook 2021

Our latest research now provides firms with greater insight into how this value can be unlocked – through understanding customer emotions.

Huntswood’s Complaints Outlook 2021 provides in-depth insight into the emotions felt by customers throughout each stage of the customer journey. It provides recommendations firms can take to improve these journeys and make customers feel valued – helping to build longer and deeper customer relationships and gain new customers through advocacy.

Currently only 1 in 20 complainants becomes an advocate for the company as a result of their complaint experience. However, Complaints Outlook 2021 suggests that this can be increased to as high as 1 in 4 when customers are extremely satisfied with their overall experience.

The top six customer needs in the complaints journey

Complaints Outlook 2021 is informed by a YouGov survey of 2,522 customers who made a complaint to a broad range of financial services and utilities companies. This is complimented with Huntswood’s own research into the experiences of 54 firms and, for the first time this year, the views of 500 complaint handlers themselves. 

The survey identified six customer needs in the complaints journey, with clear actions that firms can take to address each.

80% of customers are retained when complaints are resolved within the first two days.

1. Make it easy for me to complain - 64% of customers feel frustrated when they first discover an issue, rising to 74% if the process of making a complaint is difficult. This is an easy win for many firms to get right, with significant benefits.
2. Let me speak to the right person, straight away - 80% of customers are retained when complaints are resolved within the first two days. Resolving complaints at first point of contact or ensuring that customers are referred to the right person to do so greatly increases the chance of success.
3. Show me I’m valued - 17% more customers will recommend the firm to others if they feel valued when making a complaint. It is important that call handlers demonstrate they are listening and care about customer outcomes.
4. If it’s your fault, say sorry to me - retention rates are 17% higher if firms apologise when they admit fault, yet 25% of firms are not doing this every time.
5. Keep me updated - 3 out of 4 customers feel angry when they have to chase for an update on their complaint and do not receive one. Communication is essential to maintaining a positive relationship throughout the complaints process.  
6. Don’t let me hear its happened again – people are 29% more likely to remain a customer if they feel their complaint has made a difference to how a firm operates. By conducting root cause analysis, firms can not only demonstrate action but prevent future complaints. 

Opportunities for an improved complaints process

It is likely that every firm will be able to identify at least one of these areas in which performance can be improved, whether through small changes to process, training for frontline teams or investing in root cause analysis. While the COVID-19 pandemic has created a challenging environment, the 54 firms we spoke to highlighted three opportunities for enhancing their customers’ complaints experience this year:

1. An increasing use of technology and automation can support customer service teams, allowing them to keep customers updated and focus resource on areas where the human touch is most needed.
2. New ways of working allow for more flexible resource capacity, increasing access to a wider pool of experienced call handlers who can empathise with customers and resolve complaints quickly.
3. Improvements in root cause analysis will help firms identify the cause of complaints and address the problem and prevent recurrence.

If insurance firms can harness these innovations to build an operational model that demonstrates empathy throughout the complaints process, there is a clear opportunity to regain customer trust, earn customer loyalty and even create advocacy in an increasingly competitive market.

For actionable insight for every stage of the complaints journey, download Huntswood’s Complaints Outlook 2021 here.